Dollar General Has Cracked the Code to Rural America

Proper location and the right product mix has given Dollar General just what it needs to appeal to shoppers in rural America. They want smaller sizes than they get at giant big box stores, and the convenience of a store nearby. The Wall Street Journal’s Sarah Nassauer notes that as rural America struggles, Dollar General’s customer base grows. She writes:

Dollar General is expanding because rural America is struggling. With its convenient locations for frugal shoppers, it has become one of the most profitable retailers in the U.S. and a lifeline for lower-income customers bypassed by other major chains.

Dollar General Corp.’s 14,000 stores yielded more than double the profit of Macy’s Inc. on less revenue during its most recent fiscal year. And its $22 billion market value eclipses the largest U.S. grocery chain, Kroger Co., which has five times the revenue.

The retailer relies on rapid store openings to keep revenue climbing and investors happy; 2016 marked its 27th consecutive year of sales growth in stores open at least a year.

While many large retailers are closing locations, Dollar General executives said they planned to build thousands more stores, mostly in small communities that have otherwise shown few signs of the U.S. economic recovery.

The more the rural U.S. struggles, company officials said, the more places Dollar General has found to prosper. “The economy is continuing to create more of our core customer,” Chief Executive Todd Vasos said in an interview at the company’s Goodlettsville, Tenn., headquarters.

“We are putting stores today [in areas] that perhaps five years ago were just on the cusp of probably not being our demographic,” he said, “and it has now turned to being our demographic.”